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Ross Nelson column: They cling to myth of free trade

As an undergraduate in economics I was taught that free trade -- the exchange of goods and services without restriction or tariff -- was preferable everywhere and the premier path to prosperity. I learned that 19th century British economist David...

As an undergraduate in economics I was taught that free trade -- the exchange of goods and services without restriction or tariff -- was preferable everywhere and the premier path to prosperity. I learned that 19th century British economist David Ricardo's theory of comparative advantage meant not only that nations specializing in different areas could profitably trade goods, but that there was room for profitable trade even when one country was absolutely more productive than another in every field. I defended free trade policy for many years, until I read Patrick Buchanan's "The Great Betrayal" a few years ago.

I felt like a Ptolemaic adherent confronted with Copernicus's heliocentric model, the shock was so great. Buchanan covers American trade policy from its beginning to the present and shows that America grew to be the world's pre-eminent economic power as a protectionist country, and that free trade was a golden calf we only began to worship in a serious way after World War II, for political reasons.

England was the world's mightiest economic power when it practiced mercantilism (boos and hisses from economists), a sort of zero-sum, beggar-thy-neighbor protectionism according to experts. In 1860 its economy was twice that of America's. But by 1913, after England turned to free trade and no tariffs and America indulged in protectionism and heavy tariffs, England's economy was only half the size of ours, and even trailed that of protectionist Germany.

How could this be? Buchanan cites evidence that American commodity prices fell overall during the latter part of the 19th century despite the free trade canard that protected industries would merely swell with waste and featherbedding. There was indeed some waste, as the historian Elson wrote 110 years ago of America's sheltered lead industry which took full advantage of tariffs not to become more productive but to merely raise prices. But the startling upshot is that protectionism made America mighty while free trade England slipped relatively.

Lately I've confronted a number of free trade advocates and scholars with these and other pieces of evidence, somewhat tentatively at first. After all, how could so many learned experts be so patently wrong? Typically the outcome is the scholar completely avoiding or keeping his peace about the main issue: why did America thrive under protectionism while England faltered under free trade? The more evasive the experts got, the more it seemed they simply had no idea. It dawned on me that they were as ideologically driven (and thus blinded) by their belief as the most rabid Marxist is by communism. Facts simply cannot penetrate their mental fortress.

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Their only argument so far has been that America would have been richer yet had it practiced free trade, an unprovable, convenient argument and one clearly contradicted by our history and the economic history of all the great modern powers. They all grew strong under protectionism -- Japan, China, Germany, America, England, you name it.

The free traders' invulnerability to fact cannot be overestimated. They argue that free trade leads to peace and protectionism to war. Yet they ignore free trade England's constant wars and its sunsetless empire. They forget that the freest trade major nation on earth now is America, who is also the greatest warmonger. They glide over the truth that America at its protectionist peak was at peace with other countries for decades.

It seems to me that free trade only works well between producers of highly disparate goods, not fungible ones. Be that as it may, it's been both dismaying and enlightening to discover that free trade is just another dogma, another ideological crank idea we should re-examine.

Nelson is a Fargo postal worker and regular contributor to The Forum's commentary pages. He can be reached at r.cnelson@702com.net

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